Long reads

Three ‘beyond banking’ opportunities banks can’t ignore

Annerie Vreugdenhil

Annerie Vreugdenhil

Chief Innovation Officer, ING

Kodak’s missed opportunity to invest in digital photography – a technology it invented – is one of the corporate world’s best-known horror stories. You’ve heard it: the biggest film company in the world, with a secure revenue stream and loyal customers who love the brand, goes bankrupt because it failed to innovate. But that’s not completely accurate. The issue wasn’t that Kodak didn’t innovate enough – after all, it was a 24-year-old Kodak engineer, Steven Sasson, who created the first digital camera in 1975. The reason the camera never saw the light of day, was that it didn’t fit the company’s core business, so Kodak chose not to invest in it.

‘Beyond banking’ is the new open banking

The Kodak case is an example of the type of risk that companies face if they don’t look beyond their core business. In my previous article for Finextra, I wrote about the necessity for banks to invest more in their digital strategies, especially in a crisis. Similarly, financial institutions can benefit from new business models that are more relevant for customers who need banking – not banks. Let’s look at three ‘sweet spots’ they can explore to bring value to customers.

End-to-end housing journey

Global consultancy McKinsey projects that by 2025, housing ecosystems (real estate agents, mortgage providers, contractors, movers etc.) will generate annual revenues approaching $3.8 trillion globally. Given that housing is a space in which banks are already active, by providing the financial means for people to buy a home, they can strengthen their own position by exploring the end-to-end housing journey. By partnering with agents and real-estate developers, there are opportunities to capture revenues in home sales as well as related services, such as home insurance, renovations, and moving. Banks can support customers and increase engagement with them throughout their homeownership experience.

Mortgages are a key revenue driver for many banks, but more and more non-banks are offering mortgages too, putting pressure on incumbent banks’ margins. These non-banks are disrupting the industry with the power of big data. Take ING partner, Scoperty, a real estate platform that is bringing transparency to the German housing market. Its innovative algorithm lets users search for a property and gives them an estimated value of all the houses in the neighbourhood for free. Instead of only financing the customer’s dream home, banks could help them find it.

Financial health as a main service for customers

Money is a leading cause of stress for people around the world, affecting all of a bank’s customers, from individuals to large businesses. Even before the pandemic, half of all households in Europe were struggling to make ends meet. Half of small businesses held a cash buffer of less than one month, and large corporates struggled to manage their liquidity across regions. Consumers and businesses need their bank’s support more than ever. After all, money is what banks know best!

Fintechs are aggressively entering this territory with new money management tools. If creating your own money management platform isn’t an option, harness the benefits of open banking and partner with money management apps or add money management features to your banking app. Think about creating meaningful day-to-day engagement to allow customers to make smarter financial decisions – providing targeted advice for people to manage budgets, save, or build capital for investment.

A similar ‘open banking’-type approach can be applied to small and mid-sized businesses. Offering services like accounting, factoring or cash-flow analysis to small businesses allows banks to improve the quality of their advice as well as earn commission and explore an underserved customer segment. 


Customers tend to think of lending as a lengthy and complex process. That’s why newcomers who can make short-term borrowing efficient and put digital first are slowly winning in this space. The main reason for the shift is due to longstanding underserved borrowers who’ve been neglected under the wing of banks that failed to be smart with their use of customer data. Many banks’ current customer data is not only insufficient for creating personalised experiences but for determining the eligibility of a borrower and the probability of them returning the loan. This is mainly due to the banking sector’s use of traditional sources to underwrite and extend credit, often losing customers in the process. Meanwhile, the number of data sources has proliferated, with peer-to-peer lending platforms using alternative credit scoring methods to lend to SMEs, leaving banks on the side-lines.

One way that banks can get smarter in using data is by extending their existing service offerings and being active on third-party platforms to access their data. Equally important is adding new analytics capabilities to existing data, combined with alternative data sources, to improve the predictability of  loan default. By joining other platforms, banks can access new data and also cover a higher share of loan applications, giving customers more choice, even if sometimes it means the best proposition is not their own.

The financial services industry is moving in directions we could never have imagined ten years ago. To disrupt before being disrupted, banks will need to overstep industry boundaries and invest in propositions that go beyond banking.

Comments: (2)

A Finextra member
A Finextra member 10 May, 2021, 11:121 like 1 like

A less well known but equally relevant horror story is when AT&T reviewed mobile telephony in 1985 and determined that it would never be successful in the mass market. The company eventually succumbed to a takeover by Southern Bell, who retained the name

A Finextra member
A Finextra member 22 May, 2021, 13:361 like 1 like

It is worthy of note that the AT&T failure to invest in mobile telephony, resulting in them being bought by Southern Bell for a derisitory amount was as a result of a McKinsey report, which stated that they believed that there would be no more than one million mobile telephones by the year 2000. And you are basing your article on projections from the same company.